Question

Explain each concept and give examples?

(f) progressive

(g) average tax rate

(h) marginal tax rate

(i) public choice theory

(k) government expenditures

(l) rational ignorance

Answer 1

f. Progressive- A progressive tax places a higher rate on the wealthy compared with the poor. This is founded upon the income or property of the taxpayer. It's provided to help households with lower incomes pay for necessities such as housing, food, and transport. A progressive tax allows them to spend a greater portion of their income on the cost of living expenses. A flat tax or regressive tax diminishes their ability to have reasonable living standards. They deduct a greater percentage of income from the poor compared with the wealthy. The property tax is proportional. It is imposed at a rate of 40 per cent on sums greater than $11.4 million as of 2019 on the gross value of assets passed on to living beneficiaries. In 2018, the Trump tax plan nearly reversed the tax exemption point, making it less egalitarian.

g. The Average tax rate is the proportion of taxes split according to taxable income. Despite of the progressive tax system in the United States, individuals are paying various amounts of tax the higher their income gets. The average tax rate lets them find out the overall amount of tax that was paid.

h. A marginal tax rate is the rate at which tax on an extra dollar of income is paid. The federal marginal tax rate for an person in the United States will increase as revenue increases. This taxation system, called progressive taxation, aims at taxing people based on their wages, with low-income earners taxed at a lower rate than higher-income earners. While many believe this is the most equitable form of taxation, many others claim that by eliminating the motivation to work harder this discourages investment by companies.

i. Public choice, or theory of public choice, is "the use of economic methods to solve conventional political science issues." The scope involves the study of political behaviour. In political science, it is the branch of positive political theory that examines self-interested actors (voters, politicians, bureaucrats) and their interactions that can be interpreted in a variety of ways-utilizing (for example) traditional restricted utility maximization, game theory, or decision theory.

The theory of public choice is also closely related to the theory of social choice, a statistical approach to aggregating human preferences, benefits, or votes. Much early research has elements of both, and both areas are using the economics and game theory methods. Because voter behavior affects public officials' behaviour, the theory of public choice also incorporates findings from the theory of social choice. General public-choice therapies can also be listed as public-economic.

j. A government spends money on the procurement of goods and services not provided by the private sector, but which are essential for the welfare of the country. Government spending is for the defense, infrastructure, health and welfare benefits of the country. In addition, governments are subsidizing new companies or sectors that are unable to propel their operations with private sector capital, such as transportation or agriculture. Pension transfer payments are not a versatile fiscal policy tool, although unemployment benefits are contingent on the economic cycle, i.e. recession or growth.

k. Rational ignorance refrains from gaining information when the supposed expense of educating yourself on an topic exceeds the possible gain required of the information.

Ignorance of a matter is said to be "rational" when the cost of educating oneself on the problem enough to make an informed decision will outweigh any possible advantage that one would reasonably hope to derive from that decision, and it would be unreasonable to waste time doing so. It has implications for the consistency of decisions taken by large numbers of people, for example in general elections, where there is very little chance of any one vote affecting the result.